Securities and Exchange Commission
17 CFR Part 200
[Release No. 34-49259]
Delegation of Authority to the Director of the Division of Market Regulation
Agency: Securities and Exchange Commission.
Action: Final rule.
Summary: The Securities and Exchange Commission (“Commission”) is amending its Rules of Practice to delegate its authority to the Director of the Division of Market Regulation to grant or deny exemptions from the rule filing requirements of Section 19(b) of the Securities Exchange Act of 1934 (“Exchange Act”) pursuant to Section 36 of the Exchange Act, in cases of a self-regulatory organization (“SRO”) incorporating by reference the rules of another SRO. The delegation of authority is intended to conserve Commission resources by permitting the staff to review and act on exemptive applications under Section 36 when appropriate.
Effective Date: date of publication in the Federal Register.
For Further Information Contact: Florence Harmon, Senior Special Counsel, at (202) 942-0773; Geoffrey Pemble, Special Counsel, at (202) 942-0757, Office of Market Supervision, Division of Market Regulation, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-1001.
The Commission today announces an amendment to its Rules of Practice governing Delegations of Authority to the Director of the Division of Market Regulation (“Director”).1 The amendment adds to Rule 30-3 a new paragraph (a)(78) authorizing the Director to grant or deny exemptions from the rule filing requirements of Section 19(b) of the Exchange Act under Section 36 of the Exchange Act in a case where an SRO chooses to incorporate by reference one or more rules of another SRO.2
Section 36(a) provides that “the Commission, by rule, regulation, or order, may conditionally or unconditionally exempt any person, security, or transaction, or any class or classes of persons, securities, or transactions, from any provision or provisions of this title or of any rule or regulation thereunder, to the extent that such exemption is necessary or appropriate in the public interest, and is consistent with the protection of investors.”3
The delegation of authority to the Director is intended to conserve Commission resources by permitting the staff, pursuant to Section 36(a), to review and act on exemptive applications from Section 19(b) of SROs incorporating the rules of another SRO. Nevertheless, the staff may submit matters to the Commission for consideration as it deems appropriate. In addition, under Section 4A(b) of the Exchange Act, the Commission retains discretionary authority to review, upon its own initiative or upon application by a party adversely affected, any exemption granted or denied by the Director pursuant to delegated authority.4
The Commission finds, in accordance with Section 553(b)(A) of the Administrative Procedure Act,5 that this amendment relates solely to agency organization, procedure, or practice, and does not relate to a substantive rule. Accordingly, notice, opportunity for public comment, and publication of the amendment prior to its effective date are unnecessary.
LIST OF SUBJECTS IN 17 CFR PART 200
Administrative practice and procedure, Authority delegations (Government agencies), Organization and functions (Government agencies).
TEXT OF AMENDMENT
In accordance with the preamble, the Commission hereby amends Title 17, Chapter II of the Code of Federal Regulations as follows:
PART 200 – ORGANIZATION; CONDUCT AND ETHICS; AND INFORMATION AND REQUESTS
SUBPART A – ORGANIZATION AND PROGRAM MANAGEMENT
1. The authority citation for Part 200, Subpart A, continues to read, in part, as follows:
Authority: 15 U.S.C. 77s, 78d-1, 78d-2, 78w, 78ll(d), 78mm, 79t, 77sss, 80a-37, 80b-11, unless otherwise noted.
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2. Section 200.30-3 is amended by adding paragraph (a)(78) to read as follows:
§ 200.30-3 Delegation of authority to the Director of Division of Market Regulation.
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(a) * * *
(78) Pursuant to section 36 of the Act (15 U.S.C. 78mm) to review and grant or deny exemptions from the rule filing requirements of section 19(b) (15 U.S.C. 78s(b)) of the Act, in a case where a self-regulatory organization elects to incorporate by reference one or more rules of another self-regulatory organization, provided that the following specified terms and conditions are met:
(i) A self-regulatory organization electing to incorporate rules of another self-regulatory organization has requested to incorporate rules other than trading rules (e.g., the self-regulatory organization has requested to incorporate rules such as margin, suitability, arbitration);
(ii) A self-regulatory organization electing to incorporate rules of another self-regulatory organization has requested to incorporate by reference categories of rules (rather than to incorporate individual rules within a category); and
(iii) The incorporating self-regulatory organization has reasonable procedures in place to provide written notice to its members each time a change is proposed to the incorporated rules of another self-regulatory organization.
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By the Commission.
Margaret H. McFarland
Dated: February 17, 2004
1 17 CFR 200.30-3.
2 15 U.S.C. 78s(b) and 78mm.
3 15 U.S.C. 78mm(a).
4 For information concerning the filing of exemptive relief applications, see Exchange Act Release No. 39624 (February 5, 1998), 63 FR 8101 (February 18, 1998); 17 CFR 240.0-12.
5 5 U.S.C. 553(b)(A).